What's with this new overdraft policy?

[Orrex]

I don't know if the law went into effect here in PA recently, or if I'm just noticing the signs more, but I've been seeing a lot of this language lately:

If your check is returned to (business' name) unpaid, your check will be electronically debited for the amount of the check plus a fee as permitted by state law.

No mention of how big that that fee might be, you'll notice.

Is this new? Is it national? If not, does your state have this law?

It's pretty fucked up, and, like everything else, it particularly screws people with lower incomes, because in essence it says:

If you have too little money, we're going to force you to pay even more.

Additionally, you can be pretty sure that your bank will also hit you for overdraft, as well as any fees for dipping your checking account balance below the minimum balance. So the $7.32 you planned to spend on a few groceries suddenly hits you with a $20.00 return fee, plus $30.00 overdraft fee, plus $10.00 balance threshold fee.

I know, I know. The person shouldn't be writing checks against money they don't have, and in any case this is basically just a modernization of standard "returned check" fees that have been in place for years.

But something seems weirdly intrusive about this. Most of the people I see writing checks in stores are elderly, and my sense is that many of them prefer to write checks because they've done so for 60 years, and they're not comfortable personally engaging in electronic commerce.

It also seems to me that if stores can debit your account via check in this way, then they can do an instant--and free--balance verification upon receipt of the check, as well as instant clearing of the check (if funds are available) as many banks have started to do.


Regardless, this is yet another case in which our society punishes people who have the selfish gall to be poor.

[ProdigalJunkMail]

1. i think this sort of thing has been common for a while

there have always been overdraft fees, as far as i can recall...what is new about this? am i missing something (please allow for the fact that my reading comprehension level is VERY low as I have been at the office for nearly 24 hours now)?

sP

[El Pinko]

2. There have always been overdraft fees charged by the bank. (which lately have soared to around $35)

If I understand correctly, under the new system, if you write a bad check at Kroger Supermarket, then you will not only get hit with an overdraft fee charged by your bank, but Kroger will be able to later electronically charge your account for the amount of the check, PLUS an overdraft fee for Kroger.

Am I understanding it right?

[ProdigalJunkMail]

4. that has been allowed in GA for a while

most places of business will charge you a fee if you bounce a check to them...and then if it doesn't clear on a second or third attempt (which they keep charging for) they can swear out a warrant...

sP

[Orrex]

10. The automatic electronic debit is new, at least here in PA

Sure, there have always been overdraft fees, but recently I've seen policies posted (in small type) that change the check from a bank draft into an authorization for electronic fee debit.

As I mentioned, retailers certainly have it within their power to do an electronic balance verification and instant check clearing, in much same way that your debit card is DECLINED by the touch-pad if your account is too low.

[ogneopasno]

3. This isn't new.

Not in my state, anyway.

Also, punishing for being poor? Maybe they shouldn't write the bad check, then. Electronic fund verification has taken away the float, which sucks, but really now.

[El Pinko]

6. True.

I personally think that $35 is excessive for a bounced check, but if they charge that much and people STILL write bad checks, then I guess they do need some sort of deterrent.

[Orrex]

12. Electronic fund verification is fine

If the store did do a fund verification, then they wouldn't have to clear the check or charge the fee.




And, yes, it's punishing the poor--just like pretty much everything else.

[ITsec]

5. Last time I bounced a check.... over 20 years ago...

When I lived in Montana 20 years ago, "Check rite", I think it was called, was a clearing house that handled bounced checks. When a check was bounced from the bank for NSF, the merchant just forwarded that check to them. They would then send a notice to the owner in the mail, along with a copy of the check, telling them that they had something like 10 days to pick up that check, pay the original amount, and an additional $20 "handling" fee, or else they would begin legal action against you.

On top of that, the bank charged a bounce fee, $10 I recall, regardless if there was money in the account or not.

Some smaller mom and pop stores that didn't subscribe to "Check rite", would sometimes take the bounced checks and post them on a little cork bulletin board behind the cashier, so the entire world could see who the deadbeats were. It was quite effective. Back then, they didn't care about "privacy".

The solution.... just don't bounce a check.

[Orrex]

15. "The solution.... just don't bounce a check."

That's a lovely solution, and I'd love to see that happen society-wide. And let's all get off credit, and let's drive 1,000 mpg cars, while we're at it.

[RB TexLa]

7. Everyone should have to sue and go to court when someone tries to steal from them?

[PA Democrat]

8. Banks charge a deposit return item fee or "return item fee" to the

person or business who deposits a check that bounces. Our bank charges a $10.00 fee for any check we deposit into our business account that is not paid due to insufficient funds. We expect people to reimburse us for the fee our bank charges if they write a bad check. How is that selfish?

[RB TexLa]

11. Apparently everyone else should have to pay for that for them.

:crazy:

[Orrex]

14. As I wrote, overdraft fees are fine. That's not even my question.

It's the electronic debiting--apparently new to this area--that troubles me, especially since merchants have the power to do a balance verification prior to accepting the check.

[PA Democrat]

16. Those check verification services are NOT free and they are not perfect.

We typically don't find out until several days after a check is deposited that it has been returned for nonsufficient funds. Then we have to spend time calling the person who wrote the bad check and wait several more days for them to make good. I'd LOVE not to have to go through that hassle. It costs us time and money and in the meantime, we have our own bills to pay and payroll expenses.

[Orrex]

17. Do you accept debit cards?

Debit cards are routinely declined at POP without slapping the user with an arbitrary fee. The technology is the same; if we can verify a debit card's available balance, we can verify the balance of an account against which a check will be debited.

Heck, if your bank charges you $10 per bad check, do you charge your customers $10? Or some higher fee? Why?

[PA Democrat]

18. Yes, we accept both debit and credit cards, but it is the client's choice as to how

they choose to pay us. We deal with a small local bank and they charge a transaction fee for any balance verification.

We have never charged more than the fee our bank charges us. This is just silly. We are NOT the bad guys here.

[Orrex]

19. I agree that you're not the bad guy

As you point out, you're not charging more than the bank does. Frankly, I think that's admirable.


But stores that charge $35 or more (I've seen $50) are just being jerks about it, especially when they're large chain-stores.


I'll say again that I don't object to overdraft fees. But there's no reason--other than vindictive greed--for the store to charge in excess of what the bank charges the store. Heck, I'll even go in for a nominal "reprocessing fee," which--having worked in both retail and in financial services--certainly not 350% of the bank's charge.

[Zywiec]

9. Society punishes people who have the selfish gall to be poor

So only poor people write bad checks?

:shrug:

[Orrex]

13. Did I say that?

I suspect that if you examine the problem on a large scale, the people who bounce checks tend, in the main, to be of lower income levels.

[EFerrari]

21. It's so much more than that. The banks manipulate the postings

so your account goes into the red and they can then charge you. BoA makes most of its profit exactly in this way.

[Gormy Cuss]

20. At least they post a notice.

The notice should include the fee schedule however. I also agree that any business that can declare that they will electronically debit the fees ought to be able to do automatic balance verification and check clearing (or hold) instead. The fee for that service shouldn't be any more than the transaction fees charged for credit card use.

If enough consumers stopped putting up with this crap, the policies would change.

[LeftyMom]

22. I have no idea why most retail outlets even accept checks anymore.

It makes much more sense to stick to cash, credit and debit.